During the September 16, 2024 Grand Haven City Council meeting, the council voted to continue developing the Chinook Pier property in partnership with Copper Rock. Although their proposal did not include a children’s museum, it appears the possibility of the city supporting a children’s museum, perhaps in a different location, is not off the table.
This raises the question, if the City of Grand Haven decides to build a children’s museum, who will be the true beneficiaries? The developer and construction companies will obtain work. The city will receive revenue through taxation once the site is operational. The non-profit entity operating the museum will essentially receive a free facility and have future maintenance costs covered. The organizations they chose to partner with will also benefit. Children, families, and grandparents will occasionally benefit when they visit the museum, but they will pay an entry fee for those experiences. In fact, local families will end up paying in multiple ways as tax payers will likely cover a large portion of the design and construction costs, be charged entry fees, and then fund building maintenance through annual taxes.
The Chinook Pier Request for Proposals (RFP) suggested, "Up to 25% of the site improvement and construction costs" could be paid through the MEDC, Michigan Economic Development Corporation.” The Michigan Economic Development Corporation, is not a corporation at all. It is an extension of the State of Michigan government, and money that comes from the MEDC is money that was collected through taxation. Additionally, the RFP suggests developers take advantage of the Public Spaces Community Places program through the MEDC, where money collected through public fundraising can be matched with taxpayer dollars to covertly place the funding burden on Michigan taxpayers once again.
This is how public-private partnership works. Beneath the feel-good facade, public-private partnerships are really mechanisms for governments, businesses, and non-profits to fleece taxpayers. Taxpayer funded football stadiums provide a great example for how this works. In 2022, USA Today wrote about the Buffalo Bills new stadium and asked “Why do owners get taxpayer money to build venues?” According to the article, when referring to the project, Governor Hochul stressed the 10,000 temporary construction jobs that will be created, and claimed that the team's economic impact will cover "more than 100 percent" of taxpayers' investment.”
But research has disproven the governor’s claim. According to the article, “For decades, local and state governments have used taxpayer money to help build new sports stadiums for their hometown teams, often with the promise that those venues will have a major impact on the local economy. And for decades, experts have studied those arrangements and found those promised economic boons did not pan out.” Kennesaw State Economics Professor J.C Bradbury is quoted in the article. “Bradbury referenced the basic economic principle of opportunity cost – that municipalities directing hundreds of millions of dollars to sports stadiums could be ‘spending it on roads, spending it on schools, spending it on healthcare.’” Take the football stadium example and substitute children’s museum, restaurant, farmer’s market, or anything else that will be constructed with taxpayer dollars through grants, tax breaks and other incentives.
In many of these arrangements, taxpayers routinely end up picking up the tab for maintenance costs as well. During his presentation to Grand Haven City Council on July 15, 2024, Copper Rock Construction representative Greg Taylor alluded to this when he touched on negotiation of responsibilities. (45:20) “Whether we would be hired to build something that would be owned by the city, whether it be a brick and mortar or whether we were in partnership, or whether we owned that exclusively and managed it and handled the leasing; some hybrid is probably the best structure here because there is existing snow removal, existing lawn care, etc”
According to the Copper Rock Construction proposal, “Requested incentives will likely include some combination of grant, low interest loan, BF TIF, temporary property tax abatements or similar incentives based on the current MEDC programs, local Brownfield Redevelopment Authority, Downtown Development Authority, or similar local programs, potential Opportunity Zone availability, or similar incentives that are yet to be identified based on any ‘gap’ in financing which is yet to be determined.“
The proposal further explained, “We have, however, been very successful in the past in structuring sophisticated financing and incentive packages for similar projects. We have active relationships with the necessary consultants, governmental officials and others to efficiently vet and garner support for a project of this nature.”
The Momentum Center is another organization that has thrived due to the public-private partnership relationship. Momentum Center receives $290,000/per year from the county and has also received $700,000 in funding from MEDC.
Many people have great memories of children’s museums, and constructing a children’s museum does sound like a wonderful idea. With the expansion of downtown drinking establishments, Grand Haven has become less family friendly, and building a children’s museum would provide a nice alternative. Unfortunately, this initiative involves a government entity ensuring the project is viable. Regardless of where it is located, if a children’s museum is a viable business, it should not require taxpayer support.
Likewise, a restaurant, office space, or other facility, should not be built on the backs of the taxpayer for the benefit of stakeholder organizations. The only real advantage to building a children’s museum over a restaurant, or other structure is the emotional factor. The public would be much more inclined to open their wallets to support a children’s museum rather than another restaurant.
The Chinook Pier development is a risky investment for taxpayers. The city council has not even determined what type of relationship they intend to have with a potential developer. Rather, they are looking to the developers for direction. I would prefer that the existing financial concerns of the city be addressed before even considering this type of project. The city council should stick to their duty of running the city and let private industry chase viable business opportunities.